Midterm Medicare Mudslinging

Summary

Scaring seniors to garner votes is a favorite political pastime, and this midterm election is no different. Democratic ads in particular are pushing old, false claims about a Republican Medicare plan, while some Republican ads are repeating a stale, misleading statistic about the Affordable Care Act.

Nearly $50 million has been spent on television advertising in the first nine months of this year on ads that mention Medicare, with Democrats outspending Republicans nearly 2 to 1, according to Kantar Media Intelligence’s Campaign Media Analysis Group. Federal, state and local campaigns nationwide have aired nearly 76,000 Democratic TV ads and more than 36,000 Republican spots on the subject from January through September.

Given that mass of messaging, we, too, are repeating ourselves — fact-checking claims that first surfaced several years ago. During the 2012 presidential campaign, we wrote that there was a serious policy debate to be had on the future of Medicare’s financing, yet voters were subjected to campaign messages aimed at scaring, not informing, them. That hasn’t changed. Nor have the specific claims being made by each political party.

Democratic ads claim Republicans would “end the Medicare guarantee,” a reference to their support of Rep. Paul Ryan’s Medicare plan. But Ryan’s plan wouldn’t end the guarantee of Medicare benefits. Instead, it proposes phasing in a government-subsidy program in which future beneficiaries pick from private plans or traditional Medicare.

Other Democratic ads claim seniors’ prescription drug costs would rise by $1,700 under a Republican proposal to repeal the Affordable Care Act, and the law’s gradual closing of the Part D doughnut hole gap in coverage. Some seniors would pay more, but the vast majority wouldn’t be affected.

Democratic ads also claim that Republicans want to cut Medicare to pay for tax cuts for the wealthy. But that makes assumptions about how the Ryan plan would be implemented. The budget plan sets goals but provides no details on how it would pay for its tax rate reductions.

Republicans, led by the National Republican Congressional Committee, continue to say the Affordable Care Act would cut Medicare by $716 billion. That’s a reduction in the future growth of spending over 10 years, not a slashing of the current budget.

Analysis

Several ads, mainly from the Democratic Senate Majority PAC, make the claim that Republicans want to “end the Medicare guarantee” or “end Medicare as we know it,” long-running Democratic talking points. In mid- to late September, we saw such claims in ads in three Senate races and four House races.

We first fact-checked variations of the “end Medicare” theme in 2011, when the claim made our list of whoppers of the year. That’s when Rep. Paul Ryan introduced a House budget plan that called for significant changes to Medicare for those who were then younger than 55. It wouldn’t “end Medicare” or “essentially end Medicare,” as Democrats claimed then. In fact, it would continue the current system, as is, for those who were already beneficiaries or close to retirement.

For those under age 55, Ryan’s plan called for a transition to a premium-support system in which those individuals, once eligible for Medicare, would get a subsidy from the government for a selection of private insurance plans available on a Medicare exchange. The subsidy would be sent to the insurer. That first Ryan plan didn’t include traditional Medicare as an option on that exchange, but his plan the subsequent year, and every year since, has. His proposals also have grown increasingly more generous in terms of how that premium-support subsidy increases over time.

A Whopper Lives On

Three years later, Democrats are still hammering Republicans for supporting Ryan’s plan. The Senate Majority PAC has aired ads attacking Republican challengers in Colorado, North Carolina, Arkansas and Iowa. In Colorado, for instance, the super PAC’s ad claims that Republican Rep. Cory Gardner would “end the Medicare guarantee.” But adding the word “guarantee” to the long-running talking point doesn’t make it any more accurate.

In the ad, which began airing Sept. 19, a man who says he’s close to retirement — “I’ve got Medicare around the corner to take care of me” — says he’s “worried” about Gardner, who would “end the Medicare guarantee. Voted for it.” On screen, viewers see the words “end to the guaranteed benefit in Medicare.”

The citation is to an August 2012 Reuters article that says: “Ryan’s plan calls for an end to the guaranteed benefit in Medicare and replaces it with a system that would give vouchers to recipients to pay for health insurance.”

The ad, however, doesn’t say that “the Medicare guarantee” would be replaced with anything at all, leaving the impression that the gentleman who is about to retire wouldn’t be able to count on getting Medicare if Gardner were elected. The full Reuters article makes clear that the current system, in which traditional Medicare directly pays for qualified Medicare services, would change to one in which beneficiaries choose from private plans (much like Medicare Advantage plans) or traditional Medicare, with a government subsidy covering all or some of the cost.

The Ryan plan — which Gardner voted for this year, as well as in 2011 — doesn’t take away the guarantee of Medicare from seniors. And the private plans offered would have to include minimum benefits equivalent to those covered by traditional Medicare, so it doesn’t take away any “guaranteed” benefits, either. Also, as we said, the plan wouldn’t even pertain to a man with “Medicare around the corner,” as the man in the ad says. Ryan’s premium-support system wouldn’t begin until those under age 55 reached Medicare eligibility.

We explained in detail the financial challenges facing Medicare, and the fact that politicians from both parties want to slow the growth of spending in the program, in our August 2012 story “A Campaign Full of Mediscare.” But politicians disagree on how best to do that.

Opponents of the Ryan plan have argued that his premium-support payments wouldn’t grow as quickly as health costs, leaving seniors to pay more out of pocket than they would under the current system. It’s true that the nonpartisan Congressional Budget Office said early versions of Ryan’s plan could cost seniors more. But the latest Ryan plan ties those subsidy payments to the average of all bids submitted by private insurers plus traditional Medicare. And the CBO said in a September 2013 report that a model such as that would cost seniors 6 percent less on average for total medical costs in 2020 than under the current Medicare system.

Opponents also argue that private insurers will attract younger, healthier beneficiaries, leaving older and less healthy seniors in traditional Medicare, and then raising costs for that program. The Ryan camp maintains there are risk adjustment procedures to guard against that. It’s a matter of opinion and speculation whether those would be sufficient.

But instead of debating the finer points of how to shore up the long-term sustainability of Medicare, political ads go for the senior scare tactics.

Another Senate Majority PAC ad, this one in North Carolina, features a young man sitting at a kitchen table with his grandmother. He tells her that Republican Thom Tillis “supports a plan that would end Medicare as we know it and raise premiums. Tillis is bad news, grandma.” As we said, the Ryan plan wouldn’t end Medicare, and wouldn’t change the current system for the man’s grandmother.

On top of that, it’s not even clear whether Tillis supports Ryan’s Medicare plan. He backed the 2012 budget plan but was quoted by CNN in May as saying on the Medicare proposal, “I haven’t studied it to the position where I can really give you a well-informed response.” Tillis is the state House speaker, so he’s not on record voting for or against the Ryan plan.

Yet another Senate Majority PAC ad in Iowa claims that Republican Joni Ernst supports “a plan cutting Medicare’s guaranteed benefit.” As we mentioned, Ryan’s proposed Medicare exchange would require private plans to cover the same benefits as traditional Medicare now does. And the group goes after Tom Cotton in Arkansas with the same “end the Medicare guarantee” claim.

The actual impact of the Ryan plan is debatable — and unknown. Clearly, AARP doesn’t support the idea. But, as we said, the latest version is modeled on a premium-support option that CBO said would cost seniors less than the current Medicare system.

Costing Seniors More for Prescriptions?

Other Democratic ads have gone after the Ryan plan for rolling back the increased prescription drug coverage for seniors instituted by the Affordable Care Act. The Ryan plan could cost some seniors more for prescriptions, if they benefited from the ACA’s gradual closing of the gap in Part D drug coverage. But how many would benefit? Not as many as the ads imply.

A Senate Majority PAC ad that began airing Sept. 29 against Tillis in North Carolina features the grandson and grandmother again, with the young man saying Tillis “supports a plan that could end up costing seniors $1,700 more every year for prescription medicine.” Some seniors could pay that much — or more — under the Ryan plan, because their drug spending reaches and surpasses the “doughnut hole” gap in coverage. But relatively few seniors reach the gap, and even fewer surpass it. The majority of those on Medicare wouldn’t pay $1,700 more for their prescriptions.

Here’s how the doughnut hole works in 2014: Medicare covers prescription drug costs, minus a deductible and copays, until total costs reach $2,850 for the year for a beneficiary. A beneficiary would then have to pay the full drug costs out of pocket until total out-of-pocket expenses alone reach $4,550, or total drug costs (for both beneficiary and Medicare) reach $6,691. At that point, a senior’s drug costs are again covered, minus a 5 percent copay.

The ACA now offers discounts on drugs purchased in that gap and slowly closes the doughnut hole until it’s gone in 2020. At that point, drug costs that previously fell in the gap would be covered, but seniors would have a 25 percent copay.

Ryan’s plan repeals the closing of the doughnut hole. But not all seniors have drug spending that reaches that gap.

In fact, 12 percent of the 35.7 million seniors with Part D drug plans reached the gap in 2013 and received discounts under the ACA. The Centers for Medicare & Medicaid Services said those seniors saved $911 on average. (There were about 52 million Medicare beneficiaries last year, but not all have Part D coverage.)

Where does the ad get its $1,700 figure? We tracked it down before, when a Patriot Majority ad used it to attack Tom Cotton in the Arkansas Senate race. It’s the difference between the lower and upper threshold of the doughnut hole gap, as referenced in a 2011 National Journal article that both ads cite.

Technically, seniors whose drug spending completely spanned the gap would pay more than $1,700 out of pocket, though how much more depends on the particular plan and drugs purchased. (Medicare.gov has more on this here.)

How many would completely surpass the doughnut hole? Statistics from 2011 indicate that less than 2 percent of all those on Part D plans completely spanned the gap and did not receive a low-income subsidy, which effectively covers costs in the gap. That’s slightly more than 500,000 people who would have fully borne the costs in the doughnut hole, according to a March 2014 MedPAC report to Congress (see pages 365-366).

More seniors could reach, and span, the gap now, of course. Some may have previously found ways to reduce their spending to avoid the gap. But seniors could face some higher costs under the ACA provision, too. The CBO has said that premiums would “increase slightly” because drug manufacturers would raise prices to compensate for the discounts they now provide. However, CBO still said that seniors in the coverage gap “will probably pay less for their drugs overall” under the law.

Ads like this one would be correct to say that prescription drug costs would increase for some seniors under the Ryan plan. But it’s unclear exactly how much, and the Senate Majority PAC ad leaves the misleading impression that all — or at least most — seniors on Medicare would face the higher costs.

A Democratic Senatorial Campaign Committee ad in Alaska uses a more accurate figure on drug costs, but still implies the higher costs would affect all seniors on Medicare. The ad features an elderly woman, who says: “My husband George has Alzheimer’s. I’m blessed to be able to care for him. I keep track of every doctor’s appointment and every bill. Dan Sullivan supports a plan to slash Medicare benefits, costing many seniors an extra $900 a year in prescription drugs.”

The figure applies to both the average savings for those who hit the coverage gap in 2013 nationwide and in Alaska. As we said, 12 percent of those on Part D plans — and 8.4 percent of all those on Medicare — saved that much on average due to the health care law, according to CMS. And in Alaska, 2,564 beneficiaries saved an average of $922 on prescription drugs. But all told, there were 69,301 Medicare beneficiaries in the state in 2012, so the savings pertain to a small percentage of Alaskans on Medicare.

Sullivan wasn’t in Congress to vote for the Ryan plan, but he has said he supports repealing the Affordable Care Act.

Cutting Medicare to Pay for Tax Cuts?

Democratic ads also frequently claim that Republican candidates want to cut Medicare to pay for tax cuts for millionaires, billionaires or corporations.

In Louisiana, a TV ad from Sen. Mary Landrieu’s campaign says Rep. Bill Cassidy’s “prescription for seniors” is to “increase Medicare costs by thousands of dollars to pay for a tax break for millionaires like himself.” In North Carolina, the Democratic Senatorial Campaign Committee’s ad titled “Marie” says Tillis “would give tax breaks to millionaires and to those who would ship jobs overseas. And he’d do it by cutting Medicare.”

And in Montana’s at-large congressional district, Democrat John Lewis is airing a TV ad titled “Likes” that unfavorably contrasts the plight of an elderly woman on Medicare, Donna Jean, with his Republican candidate, Ryan Zinke.

Let’s look at the Lewis ad, which went on the air Sept. 19 and has been running continuously since then, according to Kantar Media Intelligence’s Campaign Media Analysis Group.

Lewis Campaign TV ad: This is Donna Jean. And this is Ryan Zinke. Zinke is running for Congress on a plan to cut Donna Jean’s Medicare. Not because he dislikes her; Zinke just likes the corporations and billionaires a whole lot more. They’re trying to buy him a seat in Congress and he wants to give them another big tax break in return. Even at the expense of seniors like Donna Jean.

Viewers hear a chainsaw when the narrator says Zinke has a plan to cut Medicare, and they see the words “$200,000 tax break for billionaires” when the narrator talks about tax breaks for “corporations and billionaires.”

The ad’s assumption, then, is that the Ryan plan would be paying for those tax cuts with its proposed reductions in the growth of Medicare spending. But that’s speculation.

CTJ’s analysis is inherently handicapped because Ryan’s budget resolution is an incomplete, nonbinding policy statement. It sets “goals” and offers “illustrative policy options,” but it does not detail how those goals will be met.

For example, Ryan’s plan calls for lowering the income tax rates “with a goal of achieving a top individual rate of 25 percent and consolidating the current seven individual income-tax brackets into two brackets with a first bracket of 10 percent.” (Currently, the seven income tax brackets range from 39.6 percent to 10 percent.) It also calls for repealing the Alternative Minimum Tax and tax increases in the Affordable Care Act, and reducing the corporate rate from 35 percent to 25 percent.

But another goal of Ryan’s plan is to make the tax overhaul revenue neutral — though it doesn’t provide any specifics on how to raise the revenues needed to replace what the nonpartisan Tax Policy Center said in 2013 would have been a loss of $5.7 trillion in tax revenue in the first 10 years. “In the end, the Ryan budget is only half-a-plan. It outlines politically attractive tax cuts but says nothing about the tax increases necessary to pay for them,” Howard Gleckman at the Tax Policy Center wrote.

This has been the case with all of Ryan’s budget plans, which leave the difficult tax decisions to the House tax-writing committee known as the House Ways & Means Committee. When Ryan came out with his latest plan in April, Gleckman again wrote that the tax plan is “not serious” because it lacks details. He said: “[T]o the surprise of absolutely no one, this budget includes no specific proposals for cutting any of those tax preferences. Not a single one.”

In an interview, Gleckman told us Ryan has devised a plan that “seems tailored for maximum deniability.”

“We know that Ryan supports major tax cuts. We know that he supports increasingly unidentified spending reductions; they get less and less specific all the time. And we know that he does support reducing the deficit,” Gleckman said. “The problem is he doesn’t answer the question that you and I and others want to answer.”

Citizens for Tax Justice fills in the yawning gaps in Ryan’s plan with assumptions that may or may not happen. As Gleckman at the Tax Policy Center wrote in 2013, the Ways & Means Committee “could make major changes in the budget panel’s plan.”

This Democratic line of attack harkens back to what we wrote during the 2012 presidential campaign, when Republican nominee Mitt Romney offered a similarly vague revenue-neutral tax plan. As we wrote at the time, Romney offered an “impossible tax promise,” citing the Tax Policy Center’s conclusion that Romney could not cut income tax rates as deeply as he proposed without losing revenue or favoring the wealthy. At the time, Donald Marron, director of economic policy initiatives at the Tax Policy Center, said Romney’s plan “can’t accomplish all his stated objectives.”

But we also wrote that Democrats could not make the claim that Romney’s plan would raise taxes on the middle class to pay for tax cuts for the wealthy, because Romney insisted his plan would not raise taxes on the middle class and, lacking details, there was no way to know the net impact of his plan on middle-income taxpayers.

In this case, Ryan calls for Medicare changes that are designed to slow the future growth of Medicare. But he says any savings from slowing future Medicare spending will be used to extend the life of the program, not on tax cuts or any other new spending. In a conference call on the day he announced his fiscal 2015 budget, Ryan told reporters, “We want to make sure that all the savings that come from Medicare go back to Medicare to shore up its program.”

That’s exactly what Obama has said about the projected $716 billion in Medicare savings in the Affordable Care Act. Nevertheless, Ryan himself has accused Obama of raiding Medicare to pay for Obamacare, even though the savings from those same cuts were included in Ryan’s budget plans — proving again that serious suggestions for curbing entitlement spending too often becomes political fodder for both parties. It also provides a perfect segue to our next item.

Just in the month of September, the National Republican Congressional Committee alone has run 10 separate ads that mention Medicare a total of 78 times in eight House races, according to Kantar Media Intelligence’s Campaign Media Analysis Group.

In West Virginia’s 3rd Congressional District, NRCC began running an ad titled “Medicare” on Sept. 23 that (correctly) says that fact-checkers, including us, have called Rep. Nick Rahall’s ads “misleading and shameful.” But then it goes on to make its own shamefully misleading claims.

The ad accuses Rahall of “cutting Medicare for West Virginia seniors” and features a senior citizen talking about the “cuts.” Fred Langille of Huntington, West Virginia, says: “They’re hurting me. They’re hurting my family. People can’t afford this.”

The ad displays text on the screen that says, “Obamacare cuts Medicare by $716 billion” — which is taken verbatim from the headline of a Washington Post “Wonkblog” item that ran in 2012. The NRCC uses the headline in TV ads against Rep. Ron Barber in Arizona’s 2nd District and Gwen Graham in Florida’s 2nd District. The NRCC ads display images of forlorn seniors sitting in wheelchairs, shuffling with walkers and staring blankly at medical bills to illustrate the pain of the “cuts.”

Despite the alarming headline and the despondent images of seniors in the ads, the Post blog item says Medicare benefits is “one area these cuts don’t touch.”

Washington Post, Aug. 14, 2012: It’s worth noting that there’s one area these cuts don’t touch: Medicare benefits. The Affordable Care Act rolls back payment rates for hospitals and insurers. It does not, however, change the basket of benefits that patients have access to. And, as Ezra [Klein] pointed out earlier today, the Ryan budget would keep these cuts in place.

As we have explained before, the largest chunk of the $716 billion — about $415 billion over 10 years — comes from a reduction in the growth of future payments to hospitals through Medicare Part A. Before the law, Medicare Part A’s trust fund was projected to be insolvent — paying out more than is taken in from payroll taxes — by 2017. That insolvency date would be delayed 12 years to 2029 because of the ACA, according to congressional testimony by Richard Foster, Medicare’s chief actuary, at a House hearing on Jan. 26, 2011. In its 2014 annual report, the Medicare board of trustees says that date is now 2030.

The next biggest chunk of the $716 billion is an estimated $156 billion in payments to insurance companies that offer private plans to senior through the Medicare Advantage program. Roughly 15.7 million seniors — or 30 percent of all Medicare beneficiaries — have MA plans, according to a Kaiser Family Foundation fact sheet on the program. The MA plans offered extra benefits and cost the federal government about 10 percent more than traditional Medicare plans before the Affordable Care Act was enacted, according to a fact sheet by the Centers for Medicare & Medicaid Services. The law is intended over time to bring the costs of the MA plans in line with traditional Medicare plans.

Whether the reductions in future payments to hospitals and insurers have an impact on senior care remains to be seen. The Medicare board of trustees said in its 2014 annual report that the quality of care could “fall over time relative to that received by those with [non-Medicare] private health insurance” if the health care sector cannot provide care more efficiently.

We should note, too, that some provisions of the Affordable Care Act directly benefit seniors. As we already mentioned, the ACA provides a discount on prescription drugs for those in the so-called “doughnut hole” and slowly closes that gap in coverage. It also eliminates cost-sharing for some preventive care, such as cancer screenings, as explained on Medicare.gov. It also increases the amount of tax revenue that will flow into Medicare’s hospital trust fund by imposing a 0.9 percent Medicare surcharge on certain high-income individuals.

The enhanced benefits, of course, are not mentioned in the ads.

— by Lori Robertson and Eugene Kiely

Correction, Oct. 28: We incorrectly referred to the NRCC as the National Republican Campaign Committee in the original article.